# 641 – 🏥 UnitedHealth under attack – The Average Joe
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    # 641 – 🏥 UnitedHealth under attack

    victorlei

    February 28, 2024

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    Good morning. Following Nvidia’s (NASDAQ:NVDA) monster earnings report sent tech stocks surging last week, a new term is buzzing around: bubble.

    • Capital Group sees a “gentle bubble” forming in tech stocks and is reducing holdings in Tesla (NASDAQ:TSLA) — though still going full steam ahead on Microsoft (NASDAQ:MSFT) and Meta (NASDAQ:META).

    • Meanwhile, trader Simon Ree (who called the 2022 selloff) finds recent market moves reminiscent of the dot-com bubble and thinks we’re underestimating the possibility of inflation sticking.

    Now that you’ve heard from some experts let’s see where you stand in this month’s survey. How do you feel about the market going into March? Click to vote; results coming on Friday.

    📈 Bullish

    📉 Bearish


    TRAVEL

    There May Not Be Enough Planes To Get You To Your Dream Destination. You Can Thank Boeing and Airbus.

    While broader inflation heads south, travel costs are heading in the opposite direction. Baggage fees and international airfares are rising across the board, and airline CEOs have a good reason — high fuel and labor expenses. Another limiting factor has been a lack of aircraft deliveries from the dominant aircraft manufacturers, Boeing (NYSE: BA) and Airbus (OTC:EADSY).

    Staying grounded: With production still well below pre-COVID levels and demand far surpassing their output, Boeing and Airbus have amassed a backlog of over 14.8K planes. Airlines are understandably frustrated by delayed deliveries and unkept promises and are seeking compensation for the inconvenience.

    • Airbus’s slow comeback: Supply chain disruptions during the pandemic caused Airbus to cut production and workers, which has impaired its ability to meet demand.

    • Boeing’s big bust: The grounding of its MAX 9 aircraft has delayed certifications and orders of other MAX models, angering partners like Ryanair (NASDAQ:RYAAY) and Alaska (NYSE:ALK).

    Demand keeps flying. Airfare? That depends.

    The International Air Transport Association expects 2024 to be a record year for travel, with over 40M scheduled flights (+2.8% from 2019) expected to carry a record 4.7B passengers (+4.4% from 2019.) However, depending on where you’re traveling this year, the number of available planes and travel demand could cost you.

    • Staying domestic? According to Hopper economist Hayley Berg, you might be in luck, as more US-based planes will make airfares 8% cheaper year-over-year (YoY) until the peak summer season.

    • Heading overseas? The Points Guy CEO Brian Kelly warns that European and Asian airfares could be “dicey,” with Kayak forecasting a potential 10% YoY increase as limited summer travel seats fill up fast.

    Loading up on fees: While airlines might charge less for tickets, they compensate in other ways. Last year, airlines generated an estimated $33.3B from baggage fees alone, 15% higher than the previous year. And to start 2024, three major US airlines have raised their bag fees to offset rising operating costs — which means traveling light could help prevent your wallet from doing the same.


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    Cutting-Edge Tech Puts Biking on the Fast Track to the Tesla Era

    The idea started when Sean Hacking’s bike chain broke and launched him to the middle of a busy intersection.

    While getting bandaged up, he thought: There has to be a better way. So he took his engineering background to start Veer — replacing outdated metal chains with their patented carbon fiber belt drivetrains.

    Good timing meets great tech

    Shortly after founding Veer in 2019, the eBike industry took off as more cities electrified transportation spearheaded by sustainability initiatives. And since then, Hacking has grown the company 200% year-over-year, shipped thousands of drive units and developed a network of 50+ retail dealers globally.

    • Veer supplies their tech to 15 eBike, eScooter and other light electric vehicle manufacturers (and counting).

    • They lower manufacturing cost, reduces vehicle weight and extends battery range — while making it more fun to ride.


    LARGECAP RECAP

    🛒 Biden’s FTC shoots down $25B grocery megamerger

    President Joe Biden can’t eliminate inflation with an executive order, so he’s trying the next best thing — preventing megamergers that economists say would reduce competition and increase prices. On Monday, the Federal Trade Commission (FTC) announced that it would sue to stop yet another massive tie-up, this time between grocery titans Kroger (NYSE:KR) and Albertsons (NYSE:ACI).

    • The proposed $24.6B merger aimed to combine two of the largest US grocery chains — resulting in a company with over 5K stores, 4K retail pharmacies, and 700K employees.

    • FTC regulators and attorneys general from seven states argue that the merger would “substantially lessen competition” while costing Americans millions more for food and other goods.

    All is fair in love and antitrust: The Biden administration’s FTC has emerged victorious in about half of the 40 mergers it has challenged, and many companies have abandoned their proposed deals before heading to court. With the recent success of Biden’s Department of Justice in preventing the JetBlue-Spirit merger on the grounds of potential fare hikes and consumer costs, the FTC’s chances in its upcoming battle seem promising.

    🏥 Hackers target UnitedHealth’s treasure trove of healthcare data

    America’s largest health insurer, UnitedHealth (NYSE:UNH), has had to disconnect some prescription drug services this week amid an ongoing cyberattack. The attack has strained hospitals and pharmacies, impacting their ability to verify patients’ insurance coverage and fill prescriptions.

    • Patients who can’t verify their insurance have been forced to pay in cash — which may be manageable for cheaper drugs but poses significant challenges for more expensive prescriptions.

    • UnitedHealth suspects the cyberattack originates from a foreign country, but the motive remains unclear. It could be ransomware to extract money from UnitedHealth, or the hackers could be looking to sow chaos in the healthcare industry.

    More hacks, more security: Health data has become increasingly vulnerable in recent years, with large-scale breaches nearly doubling from 2018 to 2022 — which has rewarded cybersecurity firms like CrowdStrike (NASDAQ:CRWD), whose stock has almost tripled in value over the past year. They’re closing in on the top cybersecurity firm by market cap, Palo Alto Networks (NASDAQ:PANW), which Nancy Pelosi bet big on earlier this week — always a bullish signal.


    JOE’S MARKET PULSE

    🔗 Lowe's / Apple 

    American bourbon is soaring in popularity (and price): High-end bourbon is increasingly being seen as a luxury — and that’s driving up the investment demand for full bourbon barrels from leading US distilleries. Here’s how you can get in. CaskX lets you purchase a portfolio of full barrels, which are then stored at the original distillery while they age. Investors monitor their investments from an online portal and initiate a sale when the time is right. Get access to the latest bourbon investments from CaskX →*

    Markets & Economy

    Macy’s (NYSE:M) closing 150 stores over next three years: The retreat from physical retailers continues as Macy’s management laid out what they’re calling “A Bold New Chapter” — where they’ll lean into their luxury brands, including expanding Bloomingdale’s and Bluemercury stores. [Read]

    NFTs attempt a comeback: NFT sales started to rise late last year, but the embattled corner of the crypto universe is already hitting snags. For instance, investors hope crypto gaming will propel NFTs, but that sector’s viability is uncertain. Now, they’re hoping for NFTs to play a role in the finance world, but skepticism persists. [Read]

    Retirement accounts hit two-year high: A hot stock market has sent the average 401(k) balance up 14% to over $118K — with a 20% increase in Americans holding $1M+ in their accounts between Q3 and Q4 2023. [Read]

    Business & Wealth

    Sony (NYSE:SONY) to lay off 8% of PlayStation unit: It’s tough times in video games, as Sony reduced sales forecasts for the PS5 amid slowing demand. The large job cut comes a month after Microsoft laid off 9% of its games division. [Read]

    Microsoft partners with French AI startup Mistral: Microsoft will take a stake in the 10-month-old AI company, hosting their Large Language Models (LLMs, advanced systems that understand and generate human-like text) on the Microsoft Azure platform. Their latest AI model, Mistral Large, aims to rival GPT-4, developed by Microsoft partner OpenAI. [Read]

    Online brokerage eToro explores Virtual Reality (VR) app: It may be just a matter of time before you buy and sell stocks with your eyeballs. While financial services have been slow to embrace VR, eToro thinks Meta and Apple’s headsets could help traders navigate vast troves of financial information efficiently. [Read]

    *Thanks to our sponsors for keeping the newsletter free.


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    CHART


    DIGIT OF THE DAY

    The US Hotel Industry Is Shelling Out $123B In 2024 To Combat Staffing Shortages

    Travel update: Your hotel experience may soon feel the effects of staff shortages, affecting services like housekeeping, room service, and billing. The US hotel industry is struggling with major staffing shortages and increasing wage demands, which are expected to drive up travel costs.

    • Since early 2020, employment in the accommodation sector has dropped by 9%, highlighting an ongoing shortage of hotel staff.

    • In 2024, hotels are expected to spend 20% more on wages compared to 2019 — bringing compensation to $123B, as the American Hotel & Lodging Association reported.

    The price to pay: According to Deloitte’s September travel report, staffing shortages have led nearly 70% of hotels to scale back or eliminate amenities and services. However, regions facing staffing challenges, such as Southern Florida, are leveraging technology like QR code-based room service orders to address the issue. And, of course, AI is already disrupting the industry, handling tasks such as check-ins and customer inquiries.


    EXTRA JOE

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